City bets against oil at $50

CITY punters believe there is only a one-in-five chance oil prices will break the $50-a-barrel mark within the next month despite the series of records set on both sides of the Atlantic since the start of August.

Traders claim that smaller players are also beginning to take up short positions to 'pick the top' of the oil price in the belief it will start to ease in the run-up to the fourth quarter of the year.

James Parker, a dealer at City Index, said: 'There are people betting on even higher prices, and some of these have quite large positions, but they are fewer in number than those betting on lower prices.'

City's rival IG Index is quoting a price of 16-20 on the likelihood that Nymex crude in New York will pass the $50 mark before the expiry of its October contract, in mid-September.

The bet will settle at 100 if the $50 is touched between now and the end of the contract, or at zero if it is not - so the price was signalling a probability of 16% to 20%.

US crude eased 25 cents to $45.80 today after reaching $46.91 yesterday on fears over the outcome of the referendum on the future of Venezuelan President Hugo Chavez.

Brent for October delivery fell back 53 cents to $42.16. The September Brent contract expired yesterday after hitting yet another all-time high of $44.10.

Rob Laughlin, an analyst at GNI Man Financial, said markets were 'taking a breather' after the recent rises. He added: 'People are now looking for the next thing to drive prices up again.'